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Jobs & The Election
With three of the four Democratic mayoral wannabes itching to raise taxes, Gotham's economy may be headed for a rough time.
But just how much damage would a tax hike by any of the three - Mark Green, Fernando Ferrer and Alan Hevesi - do?
Until now, it's been hard to say.
But yesterday, in a report released by the Manhattan Institute, Senior Fellow E.J. McMahon put the damage into perspective. Readers can ponder the gory details in his dispatch for The Post on the previous page.
But beware: It ain't a pretty sight.
McMahon found that restoring two Dinkins-era income-tax surcharges would cost the city some 37,000 jobs.
And that the new mayor would raise considerably less than a dollar of new revenue for every dollar of new taxes, because the hike would shrink the economy.
By contrast, McMahon also found that broad-based tax cuts since 1997 spurred the creation of some 80,000 private-sector jobs - about a quarter of total city job growth. And that dropping what's left of the Dinkins surcharges would produce another 15,000 jobs.
To be clear, the 80,000 jobs were in addition to those spurred by the national boom. Indeed, New York City's job growth, about 11 percent since 1997, far surpassed the nation's 8.4 percent rate.
That's particularly impressive, given the city's decades-long pattern of lagging behind the nation in growth, even when Wall Street has soared.
Indeed, the past four years, says McMahon, "have produced the strongest job growth on record in New York City."
Why? Tax cuts - plain and simple.
How does it all work? Simple, says McMahon. When taxes go down, there's a greater incentive for employers to do business in the city - or less of a disincentive. "Economists of all stripes," he says, "agree that tax cuts generally stimulate economic activity . . . "
There's a warning, too. Budget gaps, especially if the economy sours, may pressure the new mayor and City Council to hike taxes, worsening things disastrously.
Only one of the four mayoral contenders, City Council Speaker Peter Vallone, understands this. Indeed, Vallone fought to eliminate one of the Dinkins surcharges, and he vows not to hike taxes.
With the primary just five days off, McMahon's study provides a timely, vital reason to pull the lever for Vallone.
©2001 New York Post
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